Specialty Care Transformation

Specialists have been left behind in value-based payment design. The Medicare Shared Savings Program centers on primary care attribution and total cost of care. BPCI-Advanced focused on acute care episodes. Neither model created a pathway for specialists to participate in value-based payment on terms that fit how specialty care is organized and delivered. The Ambulatory Specialty Model, finalized in the CY 2026 Physician Fee Schedule and launching January 1, 2027, is CMMI’s first mandatory model designed specifically for specialists.

ASM targets cardiologists treating heart failure and specialists treating low back pain, including anesthesiologists, pain management physicians, interventional pain specialists, neurosurgeons, orthopedic surgeons, and physical medicine and rehabilitation physicians. Approximately 8,600 physicians in selected geographic regions will be required to participate, managing roughly 600,000 episodes annually for about 550,000 beneficiaries with approximately $2.8 billion in episode spending. Participation is automatic for eligible clinicians with no opt-out pathway.

The model signals a structural shift in CMMI’s approach. Value-based care is no longer a primary-care-only initiative. CMMI is expanding accountability across the full spectrum of care, including the specialists who drive a substantial share of Medicare spending. For specialists in the selected regions and specialties, mandatory participation begins in less than a year. For specialists outside the initial cohort, ASM’s design and expansion trajectory deserve attention now.

Why Specialists Were Left Out

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Value-based payment models centered on primary care for structural reasons. Primary care providers are the attribution anchor in ACO models: beneficiaries are assigned to ACOs based on where they receive primary care services. Primary care serves as the hub for care coordination, referral management, and population health management. The total cost of care accountability that defines ACO models flows naturally from primary care’s role as the entry point to the healthcare system.

Specialists contribute substantially to Medicare spending but have not had payment models aligned with value. A specialist who receives patients by referral does not control the upstream population health management that determines which patients arrive, how sick they are, or what co-morbidities complicate their care. Episode-based models like BPCI addressed acute care episodes but did not create ongoing accountability for chronic disease management in the outpatient setting.

The gap has real consequences for specialists. Specialists in WISeR states face prior authorization review for services like knee arthroscopy, spinal procedures, and nerve stimulator implants without a value-based payment offset that rewards high-quality, appropriate care. Consolidation pressure on independent specialty groups has intensified as health systems seek to capture referral networks. The APM incentive program under MACRA creates different payment update tracks for physicians in qualifying APMs versus those in MIPS, but specialists have had limited APM options to join.

CMMI’s design choice in ASM addresses the attribution challenge by using episode-based cost measures to define specialist accountability. Rather than assigning a population to a specialist, the model attributes episodes of heart failure or low back pain care to the specialist who provides the plurality of services during the episode. This approach fits how specialists actually practice: providing intensive management for specific conditions rather than serving as the ongoing primary care relationship.

The Ambulatory Specialty Model

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ASM is a mandatory, two-sided risk model. Specialists who meet the eligibility criteria in selected geographic areas will be required to participate. There is no voluntary entry pathway and no opt-out or hardship exemption. CMS selected approximately 25 percent of core-based statistical areas and metropolitan divisions for the initial model period. The preliminary participant list was released in early 2026, with the final list expected by July 2026.

The model runs for five performance years from 2027 through 2031, with payment adjustments applied two years after each performance year. A specialist’s performance in 2027 affects payments in 2029. The payment adjustment range starts at plus or minus 9 percent of Medicare Part B payments in the first two performance years and increases to plus or minus 12 percent by 2031. Unlike MIPS, which is budget-neutral, ASM will generate savings for CMS: the model retains 1.35 percent of Part B payments for relevant episodes in year one, rising to 1.80 percent by year five, before calculating performance adjustments.

Eligibility requires that a physician have at least 20 attributed episodes of heart failure or low back pain during the measurement period, practice in a selected geographic area, and bill under an eligible specialty code. For heart failure, the eligible specialty is general cardiology. For low back pain, eligible specialties are anesthesiology, pain management, interventional pain management, neurosurgery, orthopedic surgery, and physical medicine and rehabilitation.

Performance evaluation occurs across four domains: quality, clinical practice improvement, cost, and promoting interoperability. The measures are clinically relevant to each specialty and condition, aligning with MIPS Value Pathways to reduce reporting burden while increasing clinical specificity. Each participant receives a composite performance score compared against a threshold, with relative performance determining whether the payment adjustment is positive, neutral, or negative.

The Collaborative Care Arrangement requirement is central to ASM’s design. Each participating specialist must establish at least one CCA with a primary care provider. The arrangement must include at least three of five defined elements: bidirectional data sharing, co-management of care, transitions in care planning, closed-loop referrals, and integration of care coordination activities. Both specialists and primary care providers will collaborate in screening for health-related social needs and developing integrated care plans. The CCA requirement reflects CMMI’s view that specialist outcomes cannot be isolated from the primary care relationship that refers patients and manages their overall health.

The WISeR Overlap

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Specialists most exposed to WISeR prior authorization review are also operating in a policy environment where value-based accountability is expanding. Spinal procedures, knee arthroscopy for osteoarthritis, skin substitutes, and nerve stimulator implants are WISeR’s initial targeted services. Specialists performing these procedures in the six WISeR states face authorization burden without a payment model that rewards quality over volume.

ASM does not directly target the same services as WISeR, but the overlap is conceptual rather than procedural. A spine surgeon treating low back pain in a WISeR state faces prior authorization for certain procedures while also potentially being an ASM participant accountable for total episode cost and quality outcomes. The combination creates simultaneous accountability through two different mechanisms: administrative review of individual services and financial accountability for episode-level performance.

The strategic case for specialists is that demonstrating value through ASM participation may eventually reduce WISeR burden. WISeR’s gold carding pathway, expected to be announced in mid-2026, will create reduced authorization requirements for providers who demonstrate high approval rates. Specialists who consistently provide appropriate, guideline-concordant care and document outcomes effectively may qualify for gold card status over time. ASM participation creates the performance tracking infrastructure that could support gold carding eligibility.

Building a Specialty Risk Strategy

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Specialists who anticipate ASM participation should begin preparation now. The performance period begins January 1, 2027, leaving less than a year to build the capabilities that will determine payment adjustments starting in 2029.

The data infrastructure for episode-based cost measurement requires attention. Specialists need visibility into what spending is being attributed to their episodes, where utilization is occurring, and how their performance compares to peers. CMS will provide enhanced performance data to participants including episode-level cost and utilization reports, but practices must have the analytical capacity to act on this information.

Care pathway development can reduce variation in episode costs without restricting clinical judgment. Identifying which conditions and procedures generate the most avoidable variation, standardizing pre-procedure evaluation and post-procedure follow-up, and establishing evidence-based protocols for common clinical scenarios create efficiency without mandating specific treatment decisions. Low back pain management, in particular, has substantial evidence regarding which interventions are effective and which provide little benefit or could lead to harm.

The CCA requirement means specialists must identify primary care partners for formal collaborative arrangements. Independent specialty practices that do not have existing relationships with primary care groups need to develop them. The arrangement must include shared beneficiaries, data exchange capabilities, and defined roles for care coordination. Practices should begin these conversations now rather than scrambling to establish CCAs in the final months before model launch.

The group practice consolidation question is relevant but not determinative. CMS designed ASM with individual physician participation explicitly to level the playing field for small and independent practices. The model does not require group-level participation or scale that only large organizations can achieve. However, practices with shared infrastructure for data analytics, quality reporting, and care coordination may be better positioned than solo practitioners to meet model requirements efficiently.

For specialists outside the initial ASM cohort, the model’s trajectory deserves attention. CMS selected heart failure and low back pain because these conditions represent roughly 6 percent of total annual Medicare spending for Traditional Medicare. If the model succeeds in generating savings and improving outcomes, expansion to additional conditions and specialties is likely. Gastroenterologists, pulmonologists, rheumatologists, and other specialists managing high-prevalence chronic conditions should be watching ASM’s development and considering what voluntary preparation would position them for potential future inclusion.

The combination of ASM, TEAM, WISeR, and the LEAD model’s CMS Administered Risk Arrangements represents a comprehensive shift in how CMMI approaches specialty care. The era when specialists could operate entirely outside value-based payment is ending. ASM is the beginning, not the end, of mandatory specialist accountability.

Related Reading

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MCR-01_07 LEAD and ASM: New Pathways for ACOs and Specialists MCR-01_03 WISeR: Prior Authorization Comes to Traditional Medicare